Are You Ready for Retirement?

By cynthia coulson

william taufic

“Don’t invest in any financial product if you can’t explain it to a friend,” warns Julie Jason, a lawyer, money manager and author, whose new book is The AARP Retirement Survival Guide: How to Make Smart Financial Decisions in Good Times and Bad. “What I mean is that you have to not just hear the message, not just feel good about the message, but you also have to be able to explain what can go wrong and accept what can go wrong.” Investors should have an attitude of “healthy skepticism,” she says. “People buy these crazy things that they can’t get out of, and you especially don’t want to do that if you are retired.”

Having spent the past twenty years as founder and president of Jackson, Grant Investment Advisers in Stamford helping people plan and invest for their retirement, the Greenwich resident says she’s observed that the key to success is not simply how affluent you are. “It’s about attitudes and about awareness. The two most important things are to increase your awareness of cash flow and be mindful of the fact that you don’t have to have a huge amount of money to have a secure retirement.” People need to know how much they spend on what she terms “musts” (basic expenses such as housing, food, transportation, medical costs, taxes) and how much on “wants” (entertainment, travel, gifts and other discretionary items). She explains in her book how to calculate the amount of income needed to support a secure retirement, taking into account factors as varied as lifestyle, medical conditions and taxes.

The book addresses issues that confront both inexperienced and sophisticated investors. It analyzes the pros and cons of a range of investment options from the familiar IRAs, CDs and mutual funds to the more complex GMIBs (guaranteed minimum income benefits) and equity-indexed annuities, to name a few. There’s information on how to evaluate these and other financial products and where to get more information on them. There’s a chapter on who needs a financial adviser and what to ask when selecting one (how is he paid?) and another on scams and dubious sales pitches (there’s no free lunch at a “free” lunch or dinner seminar!). Plus there are worksheets for managing assets, income and expenses, a risk assessment, case studies and more.

The AARP Retirement Survival Guide is Julie’s fifth book on financial topics. Although she had originally planned to write a portfolio management book telling high-net-worth people how to structure their portfolios for retirement, that plan changed after she linked up with AARP, and the focus was broadened to include individuals with more modest means. “That was a challenge for me because how do you tell people how to manage their portfolio if they have no portfolio?” she comments. “I decided to focus on how to find ways to improve your situation no matter how much money you have. The book is simple enough for anyone to understand, especially the cash-flow concept, but it also goes deeper for those with some knowledge and it builds on that knowledge.

BUSINESS & BOOKS“I write books when I have something to say,” Julie says. “I wrote this book because it’s not self-evident how people should move to a retirement portfolio.” Finding time to write is difficult, she adds, because along with running a money management practice, she produces a weekly newspaper column and serves as an arbitrator and mediator with FINRA (the Financial Industry Regulatory Authority) to resolve disputes between investors and financial firms. In November she completed a three-year term on the federal Taxpayer Advocacy Panel, which is appointed by the Secretary of the Treasury and advises the IRS on strategic initiatives and taxpayer issues. Since moving to Greenwich in 1976, she’s also taught courses on investing at Norwalk Community College and Greenwich Continuing Education and has volunteered for a number of local nonprofits. Julie has two daughters, Ilona Eken, thirty-three, who works as affixed-income analyst at Bank of America Securities, and Leila Jason, twenty-nine, who recently graduated from Fordham Law School.

“When I’m writing, I take a break from the volunteer activities and do it on nights and weekends,” she says. “My family knows that if I’m in the middle of writing a book, they are not going to see me much.” The idea for her investment column in Greenwich Time and the Stamford Advocate came after she wrote two books on 401(k) plans. Julie decided to write the first one, You and Your 401(k), because she had a client who was a senior attorney at an accounting firm who wasn’t participating in his 401(k). “I went to the bookstore to buy him something on the topic,” she recalls, “and I realized that there was nothing in print at the time that compared a 401(k) plan with an investment that you could make on your own. From the point of view of a money manager, I wanted to know if this was a good deal or not.” The second book, The 401(k) Plan Handbook, offers guidance for sponsors setting up the plans. Realizing that the public was generally not aware of the value of 401(k)s, she suggested writing about them to the two newspapers, and the column was born.

Tall, with stylish blond hair and a straight-forward manner, Julie makes complicated topics easy to understand, an ability that’s rooted in her background. Her mother was an ophthalmologist and her father was an electrical engineer with a Ph.D., who held more than twenty patents. “My father would have me proofread his patent applications to earn my allowance,” Julie says, adding with a laugh that she would sometimes run in the other direction when she saw him approaching. “That helped me analyze something very complex and break it down to its simplest components. You have to figure out what really makes something work in order to explain it. I find that process curious, challenging and extremely satisfying.”

Julie grew up in Ohio in a close-knit family surrounded by friends and dogs and horses. She loved books, writing stories and keeping her journal. “Reading, writing and riding, that was my childhood,” she recalls. Although she originally wanted to be a doctor, and at age ten used to practice using both her left and right hands so she could be a surgeon, she ended up earning a law degree at Columbia. Julie chose Baldwin-Wallace College in Berea, Ohio, after her parents said they’d buy her a car if she attended college close to home (she got a Karmann Ghia).

After working for a New York law firm for a couple of years, she joined Paine Webber as a securities lawyer and became assistant general counsel. She accepted a chance to transfer to the business side to learn about the markets. She started her training as a runner on the floor of the COMEX. “I went from having a staff and sitting at a leather-embossed desk to wearing tennis shoes and no staff and no chair,” she says. After a couple of moves she was made president and director of Paine Webber Futures Management, the firm’s commodity pool subsidiary. “I got my start working in a very pressured, very competitive corporate environment,” Julie observes, “and I enjoyed every minute of it.” She founded Jackson, Grant Investment Advisers, named after Stonewall Jackson and Ulysses S. Grant “for strategy and tactics,” in 1989.

DEFINING YOUR PLANSAmong the lessons Julie has drawn from her years of advising clients is the importance of couples being what she terms “in sync” with each other about finances. “When they reach retirement age, couples that are successful think of retirement as a joint venture, almost like a business. They understand cash flows, where the money is coming from, and they jointly meet with the financial adviser and the attorney and the accountant.”

Couples likely to have difficulty have not shared financial responsibilities, Julie says. “When I talk to older retirees, one of the things I sometimes hear is, ‘I don’t want to talk to my husband about this because he’s my hero, my leader, and I don’t want to challenge him.’” But problems can arise if that husband predeceases his wife, after retirement or earlier. Julie tells about a woman who suddenly lost her husband when he was in his fifties. “He had made all the financial decisions,” she says. “The widow was referred to a wealth management group with no experience dealing with someone in her situation. She signed paperwork in blank and had them fill it in, and later there was trouble with her account.”

If a couple has not established a joint approach to their finances, Julie cautions that money should not be the focus of their initial conversation about retirement. “It has to start with a discussion of hopes and dreams and fears.” The couple should talk about what happens if one of them gets sick? What if one gets dementia thirty years from now? What if they run out of money?

“If they can hear each other out and not judge what that person’s saying, not say, ‘that’s never going to happen, don’t worry about it,’” Julie says, then the couple can discuss their financial goals and issues like what they want a financial adviser to do, or not do, afterward.

STRUCTURE & ANALYSISBaby boomers preparing for retirement face a different challenge from their parents’ generation, according to Julie. People who grew up during the Depression know how to save and be frugal, whereas baby boomers might borrow to “fund their indulgences,” she says. “Have you ever met a baby boomer who likes to budget?” she asks. “It’s not in their DNA. Maybe you could just go out and buy anything you want when you were working, but you can’t retire on plastic.”

Even post-baby boomers who are years away from retirement should optimize their savings and invest them appropriately. “When you are twenty or thirty or forty, you can invest the way your brother or friend invests; you can buy some stocks, some mutual funds and invest for growth,” she says. “But when you are investing for retirement, what your brother or friend does has no relevance. You now need to do a cash-flow analysis and structure an investment portfolio that will last a lifetime.”

Both baby boomers and retirees are likely to be pursued by people who want to manage their money, Julie warns. “You have a bull’s-eye painted on your forehead,” she writes in her book. “Expect to be impressed, befriended, cajoled, enticed and wined and dined by multitudes of financial advisers.” In a chapter on sales pitches, scams and other tactics to guard against, she describes a company in Massachusetts that ran deceptive seminars for retirees who owned their own homes. The firm invented titles like “Certified Elder Planning Specialist” so salesmen could pose as legitimate financial advisers in order to persuade people to buy questionable financial products.

It’s important to be able to distinguish among the different kinds of individuals and firms that offer financial advice and products. People investing in the stock market forty years ago were accustomed to using a registered representative, or stockbroker, who earned commissions on the trades he executed, she says. After commissions were deregulated in 1975, “Brokerage firms started creating their own products and providing their own in-house research, and the industry changed. Now the stockbroker is the distribution arm for the firm.”

To help sort out the array of titles and specialties that can confuse today’s investor, Julie’s book divides financial advisers into several general categories according to what license or registration is required and what agency, if any, regulates them. (See “Who’s Who,” page 73.) She cautions that there are a variety of titles—such as wealth manager, financial consultant, senior specialist—that are often conferred for marketing purposes. Before selecting anyone to advise you, she stresses, learn how he is regulated and how he is paid.

Not everyone will want, or need, a financial adviser to handle their retirement portfolio, Julie adds. People who can do their own research on financial products, enjoy picking their stocks and are able to keep track of their investments fit that profile. “It’s monitoring that makes a portfolio a success. If you are not watching what’s going on, you really can’t make a reasonable decision,” she stresses.

If you decide you need a professional financial manager, Julie’s book contains sixteen questions to ask when interviewing them, ranging from what is their professional background to how they view your objectives and risk tolerance and how they plan to achieve those objectives. At Jackson, Grant, Julie says, she spends time with clients to understand their goals and to learn if she can improve their portfolios before deciding whether to work with them.

Do-it-yourselfers are not an appropriate fit for her firm, she says, nor are people whom she believes have overly optimistic expectations. She describes one such couple in their seventies who came to her at the peak of the Internet bubble in early 2000 with a “perfectly sound” portfolio of stocks and bonds that was significantly under performing the Nasdaq. They said they wanted her to invest their entire portfolio in Internet stocks. “I politely declined to take them on as clients but suggested they consider not making any changes at all,” Julie says. “I am a skeptic,” she tells people.

“I don’t believe everything I read, and I don’t believe everything I hear. I want to know what can go wrong.”